SBA's Bold Move to Empower Small Businesses

Great news for small businesses!

But first…

If only someone / some business could replace the SBA’s Jurassic-period reporting system - Neoserra - with, oh I don’t know, anything from this century!

And now this

The U.S. Small Business Administration (SBA) is set to release billions in loan dollars to venture capital funds as part of a new rule. This move modernizes the Small Business Investment Company (SBIC) program, intending to boost investment in U.S. small businesses, especially those in underserved regions, capital-intensive sectors, and areas crucial for national security. Historically, the SBIC program used a debenture system unsuited for long-term VC investments. Although there was a non-debt product, it was closed in 2014 due to potential misuse. The updated scheme will feature debentures accruing interest over the fund's lifetime, aligning with IRR-driven strategies. Investments are mandated to be solely in U.S. small businesses. Bailey DeVries of the SBA highlighted the importance of this initiative for advancing hard and critical technologies, with the SBIC loans providing a risk buffer. The SBA is anticipated to have up to $6.9 billion in available SBIC loans for fiscal 2024. A surge in applications is expected given the present reluctance of LPs to commit to new VC funds.